This paper draws on interviews with 1,535 parents and their children to examine the relationship between child labour and various household variables in urban Nigeria, where child labour studies have been very limited. We provide a comprehensive overview of the household factors and residential dynamics through which child labour evolves. Our findings demonstrate the usefulness of the household production theory in explaining the socio-economic ramifications and household context of child labour. Our findings indicate that although child labour is mostly caused by poverty and the need to prepare children with skills and training useful for future occupations, the size of the household, number of children in the household, number of children contributing to the household income, child's age, and age at which child started working – are all significantly and positively correlated with children's hours of work. However, gender compositions of the children or of the household head and age of the household head have little or no relationship with children's hours of work. Additionally, parental socio-economic status and family structure variables are associated with fewer hours of children's work. The findings have implications for policies aimed at regulating child labour in Nigeria. Africa Development Vol. 31(1) 2006: 50-65